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What is slippage – InvestChannels

What is slippage? While trading CFD you can face the slippage effect. Let’s take an example. You see that stocks of company a cost sixty two dollars and are rising in value.

You decide to open a buyer position at the current price but after the position has been opened you notice that the opening price was 62 dollars 50 not 62. The occurred difference 50 cents is called slippage.

The slippage effect can be positive or negative. In our example the slippage effect is negative. But if the trade was executed at sixty one dollars. The difference would be one dollar in your favor and the slippage would be positive.

Slippage occurs when market prices fluctuate quickly or as a market reaction to some breaking news when major events happen as a result the number of buyers or sellers increases.

Heavy trading volumes occur and trades are executed at high speed. So the price requested by a trader at the beginning can be unavailable on the market and a broker offers the trader the next best price. We wish you a great trading experience.

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